Washington Insider -- Tuesday

Dissolving Rules by Decree

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Agriculture-Related Regulations Among Those Subject to Trump Order

Several regulations in the review stage under the Obama administration on agriculture and other areas now have a more-uncertain time line after Trump officials marked them as withdrawn, sending them back to their respective departments, according to the Office of Management and Budget (OMB) website as of January 27.

To advance, the withdrawn rules would need to be submitted again to OMB. The moves are part of the Trump administration's broader regulatory freeze signed just hours after the president's January 20 inauguration. Since then, the OMB has effectively cleared the table of regulations under review. The decree put a halt on any new regulations until March 21.

In the last few weeks of President Barack Obama's term, the White House finalized a slew of long-awaited regulations, including rules creating a checkoff program for the organic industry and others overhauling poultry farming contracts. Because of Trump's regulatory freeze, the implementation of some of those rules could be delayed or abandoned altogether. The rules withdrawn by the administration had yet to be reviewed, finalized and sent out for implementation by OMB.

The freeze, in part, halts plans for USDA to seek public comment on implementing legislation creating a nationwide labeling system for foods made with genetically modified organisms (GMOs). Congress passed a GMO labeling law in mid-2016 and asked USDA to finalize the rules by 2018.

The order could prevent the department from taking comments on an advance notice of proposed rulemaking and could also push back the time line for the department to complete a study on whether electronic labels such as QR codes are an effective way to convey GMO information. That study was expected to be completed by mid-2017.

Trump's order also put a halt to a proposed rule that would establish standards for organic fish farms. That rule had been under review at OMB since August 2015.


US-Mexico Sugar Trade Suspension Agreement

Efforts to revise the 2014 U.S.-Mexico sugar trade suspension agreement have been lengthy and unresolved issues remain. The U.S. has tried to get Mexico to agree to a proposed solution but to date Mexico has not accepted, despite the U.S. offering Mexico a proposal of which Mexico has not yet responded.

Mexico is the top supplier to the U.S. sugar industry and negotiators from both countries are in talks to the suspension agreement that prescribes the balance of raw and refined sugar that heads to the U.S. to ensure refiners have what they need. Among the terms that the some in the U.S. sugar industry have proposed to Mexico are clauses that specify what type of refiner can receive Mexican imports under the deal.

The U.S. Department of Commerce in preliminary findings from a review of the 2014 U.S. antidumping and countervailing duty suspension agreements involving exports of sugar from Mexico to the U.S. released Nov. 29, 2016, indicated some transactions may be out of compliance with the agreement, among other issues.

But Commerce said it had not yet found a sufficient basis to make a reliable judgment as to whether the Government of Mexico and the Mexican respondent mills have adhered to the terms of the agreements and whether they continue to meet the requirements. The Commerce has delayed several times its final review of the matter, with the latest date said to be April.

Sugar trade between the two countries, absent any updated trade suspension agreement, would be impacted should the NAFTA accord be revised or if the U.S. officially withdraws from the pact. If so, Mexico would not be able to send much sugar to the U.S. as the U.S. sugar import quota was established during a time when Mexico did not sell much sugar to the U.S.

Washington Insider: Dissolving Rules by Decree

On Monday, President Trump signed an executive order that would limit new regulations, and says he aims to cut the number of federal regulations by 75% or more. The New York Times says that such claims are not unusual for administrations who promise to streamline government, but that such promises have a rather low success rate.

In most cases, the targets involve last-minute rules that their predecessors were unable to finalize. Beyond that, it administration's talk of "slashing most regulations" may contain considerable amounts of fantasy.

The as yet unfinished rules are "easy prey" the Times says but cutting three-quarters of the 90,000 federal regulations already on the books would be much tougher because "to roll back even one rule requires a whole new rule-making procedure, that includes writing a draft rule, taking public comment, writing a final rule, more comment, and so on." The process often takes many months.

Furthermore, the Times thinks the rulemaking process, while imperfect, is designed to prevent a president or Congress from "capriciously slashing regulations which, after all, were created to protect Americans, their workplaces and environment."

The Editorial Board continues, noting that "Mr. Trump's team, has targeted a lot of important stuff and suggests that the president "cannot eliminate or even modify these rules with the simple stroke of a pen."

So, there is no doubt about where the Times editorial board stands. In addition, perhaps a more serious view emerged last week, raised in a Times letter from three law professors from the University of Chicago with national reputations: Daniel Hemel; Jonathan Masur and Eric Posner. The professors wrote to argue that the Administration may encounter an "unexpected hurdle" concerning changes in government rules.

The group credits "one of President Trump's favorite justice, the late Antonin Scalia, who wrote in the 2015 opinion in Michigan v. Environmental Protection Agency that while the Clean Air Act instructs the EPA to issue "appropriate and necessary" regulations, the Court also required EPA to consider costs of its proposal.

"No regulation is 'appropriate' if it does significantly more harm than good," Scalia wrote. "And even though the final vote in that case was 5-4, all nine members of the court agreed that the EPA could not ignore the costs of its actions when deciding whether or how stringently to regulate" the professors wrote.

The focus of the letter was originally President Trump's wall-building plans. It says that the President is reported to be planning to rely on a law called the Secure Fence Act of 2006 as a source of statutory authority for the wall — apparently to avoid asking Congress to pass a new statute, which could be filibustered by Senate Democrats.

But the 2006 law authorizes the secretary of Homeland Security only to take actions to secure the border that are "necessary and appropriate," the writers argue, and that these are the same words (in the opposite order) the Supreme Court interpreted in Michigan v. EPA where Justice Scalia concluded that it would not be "appropriate" to "impose billions of dollars in economic costs in return for a few dollars" in benefits.

While the letter focuses on the administration's plans to build a wall along the Southern U.S. border, it then notes that "the problems that Michigan v. EPA creates for Mr. Trump's agenda extend beyond the wall." Numerous statutes contain similar language requiring agencies to take "necessary" and "appropriate" actions, or other language requiring agencies to take into account costs.

So, the professors think that while the legal details are "arcane," they may also block administration efforts to eliminate other regulations "out of hand". In fact, they said, courts will look askance at regulators who tell them they want to eliminate regulations that, a few years ago, they insisted were cost-justified. "The same rules that apply to regulation apply to deregulation as well."

And the professors think that to enact its agenda, the administration will need to explain why its policies do more good than harm.

While the administration is proceeding directly to carry out its plans to cut the government and its regulations, the Times likely is right that cutting regulations may well be more challenging than some believe — an effort that should be watched closely by producers as it proceeds, Washington Insider believes.

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